Q2 2026 Restoration Review — Accrual-vs-Cash DSCR Gap, TPA Transferability, and the Supplement-Revenue Trap

US small-business water, fire, and mold restoration acquisitions traded in a 2.5×–4.5× SDE band over the trailing twelve months ending July 2026 (n=64, BizBuySell trailing-12-month closed deals). Band placement is structural: TPA program registration cleanliness, IICRC certification depth, cash-basis SDE quality (vs accrual), and supplement-revenue normalization determine where a specific deal sits.

Restoration revenue is insurance-driven; timing between mitigation completion, claim submission, scope approval, and settlement payment can span 60–180 days. Accrual-basis SDE will be 20–35% higher than cash-basis SDE in active trailing periods. SBA underwriters work from cash-basis SDE — the adjustment is policy, not preference. Revenue recognized before insurance settlement appeared in 61% of deals reviewed; presenting accrual SDE without the cash-basis bridge memo is the dominant cause of DSCR fall-through at commitment.

TPA (Third-Party Administrator) networks — Alacrity Solutions, Crawford & Company's Contractor Connection, and Code Blue — are the dominant non-carrier preferred-vendor channels in US restoration. Major insurance carriers (State Farm, Allstate, Farmers, USAA) operate parallel preferred-vendor panels. TPA revenue typically represents 25–40% of gross. Registration in the entity name transfers at change of ownership; registration in the owner's personal name does not — and 43% of deals reviewed had TPA programs registered personally. Re-application timeline is 60–180 days during which the TPA revenue channel is interrupted.

Supplement revenue (additional charges submitted to carriers after initial estimate acceptance, covering scope changes, materials price adjustments, labor additions) is a function of estimator skill, carrier relationship management, and current carrier appetite for supplement acceptance. It compresses as claim volume increases and as carriers tighten supplement standards. Normalize to 3-year average — supplement at peak appeared in 34% of deals and reduced presented SDE by 8–18% on normalization.

IICRC (Institute of Inspection, Cleaning and Restoration Certification) credentials are the dominant industry standard. Core certifications: WRT (Water Damage Restoration Technician), ASD (Applied Structural Drying), AMRT (Applied Microbial Remediation Technician), FSRT (Fire and Smoke Restoration Technician). TPA networks increasingly require IICRC-certified staff above 75% as a baseline approved-vendor threshold. Certification gaps appeared in 41% of deals reviewed and create both TPA renewal risk and post-close exposure during carrier audits.

Non-franchise PE platforms (BELFOR Holdings ~$2B+ revenue, BluSky Restoration / Olympus Partners, ATI Restoration) bid top-of-band for $2M+ SDE platforms with strong TPA channel depth and commercial-scope capability. Franchise systems (Servpro 2,200+ locations, PuroClean, Paul Davis / Authority Brands, Rainbow International, Restoration 1) bid mid-to-upper band for franchise-fit operators within their service radius. The franchise vs non-franchise channel choice materially affects realistic exit pool.

Restoration carries a similar SDE band (2.5×–4.5×) to plumbing and electrical despite higher growth (~6.4% CAGR vs 3–4%) — primarily because the channel structure (TPA-mediated rather than direct-to-consumer recurring) creates AR-timing and TPA-transferability friction that compresses multiple. The trade-off is a durable climate-driven demand tailwind that pest control and HVAC do not share. Restoration's ~25–40% TPA-channel recurring share is materially lower than pest control's 60–90% direct-recurring, but the underlying claim-volume durability is structurally durable.